Monti forms new Italian government with no politicians

ROME -- Premier Mario Monti formed a new Italian government without a single politician Wednesday, drawing upon bankers, diplomats and business executives for a team to steer Italy away from financial disaster.

The 68-year-old former European Union competition commissioner told reporters he will serve as Italy's economy minister as well as its premier as he seeks "sacrifices" from across the political spectrum to solve the economy's woes and get it growing again.

In another troubled European economy, Greek Prime Minister Lucas Papademos easily won a confidence vote for his new government Wednesday, formed last week with politicians from the Socialists, the rival conservatives and a small right-wing party. He won 255-38 in the 300-member parliament.

Papademos' government, which is only expected to be in power until elections in February, was created to push through a (euro) 130 billion ($177 billion) new debt deal and get vital bailout funds immediately to fend off a catastrophic default. He must also oversee the implementation of a raft of austerity measures already passed, including increased taxes and the suspension of about 30,000 civil servants on partial pay.

His government is also negotiating with banks about a plan to forgive half of Greece's massive debt.

In Rome, after introducing his government, Monti and his new Cabinet ministers were sworn in at a solemn ceremony at the presidential palace, formally ending Silvio Berlusconi's 31/2-year-old government and the media mogul's 17-year-long political dominance.

Berlusconi and Monti later shared a handshake in an unofficial handover of power at the premier's office.

Monti said he will lay out his emergency plan Thursday in the Senate before a confidence vote. A second vote, in the lower Chamber of Deputies, will follow, likely on Friday. He stressed that economic growth is a top priority.

Hopes for his new administration won Italy some respite in financial markets Wednesday, but the relief didn't last long. By afternoon, the yield or interest rate on 10-year Italian bonds was back dangerously near 7 percent -- the threshold that eventually forced Greece, Ireland and Portugal to seek bailouts.

Up until summer, Italy had mostly avoided the European debt turmoil despite having a jaw-dropping debt of (euro) 1.9 trillion ($2.6 trillion), nearly 120 percent of its GDP. But after Berlusconi's frequent delays and backtracking on austerity measures, the markets lost faith that his government could fix Italy's economic issues.

Restoring confidence is crucial because, as the third-largest economy in the eurozone, Italy is too big for Europe to rescue. A debt default by Italy could break up the eurozone, a catastrophic event for the global economy.

Italy's economy is hampered by high wage costs, low productivity, fat government payrolls, excessive taxes, choking bureaucracy and low numbers of college graduates. But Monti says Italy can beat the crisis if its polarized citizenry can pull together.

"I hope that, governing well, we can make a contribution to the calming and the cohesion of the political forces," Monti told reporters.

Explaining why his Cabinet had no one from Italy's fractious political parties, Monti said he decided after talks with party leaders "that the non-presence of politicians in the government would help it."

He has also met with union leaders and business representatives.

German Chancellor Angel Merkel, who was critical of Berlusconi's efforts, sent her congratulations. Spokesman Steffen Seibert expressed her hope that Monti's government would carry out reforms "so that Italy can win back the trust of markets."

"She thinks very highly of him. He is an expert who knows the relations in Europe very well," he told reporters.

Monti's ministers include Corrado Passera, CEO of Italy's second-largest bank, Intesa Sanpaolo SpA, to head Economic Development and Infrastructure; Piero Gnudi, a longtime chairman of Enel utility company, as Tourism and Sport minister in a country heavily dependent on tourist revenues; and the current Italian ambassador to Washington, Giulio Terzi di Sant'Agata, to be foreign minister.

Monti said he put Passera in charge of two areas to ensure good coordination on projects that can boost economic growth.

A historian of the Catholic church with close ties to the Vatican, Andrea Riccardi, was named minister of international and domestic cooperation, a choice that seemed to reward pro-Vatican lawmakers.

Analysts gave Monti's selections top marks.

"I think the quality of the people is very high," said Roberto D'Alimonte, a political science professor at Rome's LUISS University. "All these people are very high-caliber, and highly respected, independent."

Yet still his choices raised some eyebrows.

"This government -- ties to banks, to business, to the Vatican, to private universities, to the usual names -- is the opposite of what this country needs," said Paolo Ferrero, leader of a tiny, far-left party.

In other choices, the new defense minister is Adm. Giampaolo Di Paola, currently NATO's top military officer. Three ministers are university professors, like Monti, and three are women, reflecting Monti's insistence that women hold more high-profile posts in government.

The Association of Magistrates -- which had an antagonistic relationship with Berlusconi's government -- welcomed the appointment of Paola Severino and pledged its support to improve the justice system.

The shift in power away from career politicians had caused bickering within Berlusconi's conservative People of Freedom Party, which eventually endorsed Monti. But Berlusconi's main coalition ally, the Northern League, is returning to the opposition during Monti's government.

The head of Italy's largest union group, Susanna Camusso, backed Monti but hoped he "won't put his priority on pensions."

Parliament last week voted to raise the retirement age as part of an austerity package to 67 by 2026 and 70 by 2050, but critics say those reforms are meaningless because they are so far in the future. The new reforms also call for the sale of state property, privatizing some services, and offering tax incentives to companies that hire young workers. But the measures contained no painful labor reforms.

Some Italians weren't so enthusiastic about an unelected government.

"When governments of technocrats are needed, it means democracy and politics are considered useless, so it's something negative that has to be for a limited period of time," said skeptic Giuseppe Drago on the streets of Rome.

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